Spencer’s Benefits Reports NetNews – June 3, 2016

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The IRS has clarified that employers may not exclude from employees’ gross income either payments of cash rewards for participating in wellness programs or employer reimbursements of premiums paid by employees (originally via salary reduction through a cafeteria plan) for wellness program participation. The guidance was set forth in a recent memorandum to Tax Exempt and Government Entities (TEGE) Division Counsel senior attorney Mark Ericson.

Most enrollees are satisfied with cost and coverage of marketplace plans

The majority of enrollees in marketplace plans are satisfied with their plan’s coverage and costs. However, marketplace enrollee satisfaction with deductibles and premiums has declined since 2014, according to a Kaiser Family Foundation (KFF) survey of individuals who buy their own insurance….

Waiting periods not permitted for covered benefits, including pediatric orthodontia

Insurers are not permitted to require an enrollee to wait to access covered benefits. Such a policy will be considered a violation of essential health benefits (EHB) requirements. This rule now applies to pediatric orthodontia coverage….

The IRS has issued final regulations that eliminate the requirement that each disbursement from a designated Roth account that is directly rolled over to an eligible retirement plan be treated as a separate distribution from any amount paid directly to the employee and, therefore, be separately subject to the rule in Code Sec. 72(e)(2) allocating pretax and after-tax amounts to each distribution. The regulations are effective May 18, 2016 and generally applicable to distributions from designated Roth accounts made on or after January 1, 2016….

An individual and his employer had no standing to sue the Obama administration for implementation of its “transitional policy,” which permitted health insurance companies to extend plans that did not comply with Patient Protection and Affordable Care Act (ACA) requirements for nine months, nor could they bring an equal protection challenge for application of either the transitional policy or the hardship exemption to the individual mandate. The U.S. Court of Appeals for the District of Columbia Circuit determined that the appellants could not demonstrate that the transitional policy, which was applied evenhandedly, caused any alleged injury. The appellate court affirmed the district court’s decision and dismissed the case for lack of standing….

Annual health care costs for a typical American family now exceeds $25,000

In 2016, the cost of health care for a typical American family of four covered by an average employer-sponsored preferred provider organization (PPO) plan is $25,826, according to the Milliman Medical Index (MMI). The cost of care has tripled since its value of $8,414 in 2001, Milliman noted. While the increase from 2015 to 2016 was the lowest annual increase Milliman has measured (at 4.7 percent), the rate of increase is still well above the growth in the consumer price index (CPI) for medical services…

On May 23, 2016, the United States Bankruptcy Court for the Eastern District of Michigan, Southern Division, entered an order removing William Robin Rose, a fiduciary to the Rose Printing Services Inc. Employees 401(k) Retirement Savings Plan, Rose Printing Services Inc. Employees Health Plan and Rose Printing Services Inc. Employees Dental, along with the company, from any position held as a fiduciary and permanently enjoined him from serving as a fiduciary or service provider to any ERISA-covered employee benefit plan in the future. The case isIn re: William Robin Rose, No. 15-03109-dof….

Over 7.4 million fewer persons were uninsured in 2015 compared to 2014, dropping the overall share of uninsured persons in the U.S. to under 10 percent for the first time, according to a Centers for Disease Control and Prevention (CDC) National Health Interview Survey Early Release Program (Survey) based on data estimates for all 50 states and the District of Columbia. The survey found that the total number of uninsured persons dropped to 28.6 million, or 9.1 percent of the U.S. population. In addition, among adults aged 18 to 64, the percentage who were uninsured decreased from 16.3 percent in 2014 to 12.8 percent in 2015, and for children aged 0 to17 years, the percentage that were uninsured decreased from 5.5 percent to 4.5 percent in the same timeframe….

Advocate’s prayer for church plan status unanswered by Seventh Circuit

The Seventh Circuit has joined the Third Circuit in rejecting an effort by a church-affiliated hospital system to shield its defined benefit pension plan from regulation under ERISA as an exempt church plan. In order to be exempt from ERISA, the court stressed, a church plan must be established by a church, even if the plan is maintained by a church-affiliated entity and covers employees of the affiliate….